August 06, 2004

Bronco Bustin', or, The California Supreme Court Takes a Napa

The California Supreme Court has upheld state laws that require that wine sold under a brand name that includes the word "Napa," or any other designation of a designated viticultural area, must be made principally with grapes that were actually grown in the area referred to. The court has disallowed the practice of Fred Franzia's Bronco Wine Co. of bottling wines under brand names such as "Napa Ridge," "Napa Creek" and "Rutherford Vintners" when the grapes from which they were produced came from less respected areas, often hundreds of miles from the Napa Valley.

Bronco Wine Co. is an enormous enterprise, producing wines under some 30 different brands. In many cases, those brand names once belonged to other wineries, but were acquired by Bronco. Perhaps the best known of the Bronco labels is Charles Shaw -- aka "Two-Buck Chuck" -- of which I have written previously here and here, not to mention here. In the case before the California Supreme Court, the brands involved were acquired by Bronco at various points in the past ten years or so. From the Court's introductory summary of the facts we learn (with emphasis added):

Bronco asserts that it specializes in 'premium wines at affordable prices.' Some of Bronco’s wine is bottled at its facilities in Ceres (near Modesto, in Stanislaus County) and in Sonoma County; other Bronco wines are bottled by petitioner Barrel Ten Quarter Circle, Inc., at a recently completed facility in the City of Napa, in Napa County. The latter plant is capable of producing approximately 18 million 12-bottle cases per year -- output that would be more than double the current annual production of Napa-grown wines.

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Bronco acquired these three brand names, and the right to use these labels, from predecessor owners of wineries located in Napa County. The Napa Ridge brand, which Bronco acquired in January 2000 from Beringer Wine Estates for more than $40 million, had been in use since the early 1980s. The Napa Creek Winery brand, introduced in 1981, was acquired by Bronco in 1993. The Rutherford Vintners brand originated in the early 1970s, and was acquired by Bronco in 1994.

The prior owner of the Napa Ridge brand had used that name and label for wines made from grapes grown in California’s Central Coast, North Coast, and Lodi appellation areas, as well as from Napa County. All of the wines previously marketed by the prior owner under the Napa Creek Winery brand and most wines previously marketed by the prior owner under the Rutherford Vintners brand had been made from Napa County grapes. Under Bronco’s ownership, all three of these brands have been used exclusively to sell wines made from grapes grown outside Napa County.

Bronco's labeling practices are entirely legal under the relevant federal regulations: while new brands with geographical designations in them are required to be made at least 75% from grapes grown in the indicated area, older preexisting brands such as the ones Bronco acquired were "grandfathered" in and are permitted to use grapes from most anywhere so long as their labels also indicate those grapes' place of origin. For instance, the Napa Ridge and Napa Creek labels in issue specified that their grapes came from Lodi, and the Rutherford Vintners label indicated grapes from Stanislaus County in California's Central Valley.

In the year 2000, the California legislature at the urging of various Napa Valley-based vintners passed a statute imposing a stricter rule: any California wine with a viticultural region name in its brand must be made at least 75% from that area's grapes, or it cannot be sold or distributed in California.

The Supreme Court's opinion is unusually lengthy -- 67 pages -- but it turns on a single issue: the Court finds through an excruciatingly detailed review of the relevant legislative and regulatory history that there is no reason that California cannot adopt a stricter labeling standard for the state's wines than is required by the federal regulations. Here is the court's conclusion (again with emphasis added):

Bronco has failed to carry its burden of demonstrating federal preemption of a long established and legitimate exercise of state police power with respect to the subject regulated by section 25241. As we have seen, there is no express preemption in the present context, and Bronco’s assertions of implied preemption are contradicted by the long history we have described of concurrent state and federal regulation of wine labels including, historically, the representations appearing on labels suggesting the place of origin of the grapes used to make wine. Nor has Bronco succeeded in providing any persuasive indication that this longstanding concurrent regulatory scheme no longer is compatible with Congress’s overall purposes -- which have been to support the states’ efforts to protect consumers from misleading labeling, not to permit the type of labeling at issue here. Finally, Bronco has not established that, by purchasing a brand name that had been used prior to 1986, it acquired a federally recognized right or license exempting it from stricter state regulation.

California is recognized as a preeminent producer of wine, and the geographic source of its wines -- reflecting the attributes of distinctive locales, particularly the Napa Valley -- forms a very significant basis upon which consumers worldwide evaluate expected quality when making a purchase. We do not find it surprising that Congress, in its effort to provide minimum standards for wine labels, would not foreclose a state with particular expertise and interest from providing stricter protection for consumers in order to ensure the integrity of its wine industry.

The "federal vs. state" nature of the decisive issue suggests that Bronco Wine Co. may well petition the U.S. Supreme Court to review the case: details will be posted here if and when that occurs.

The opinion in Bronco Wine Co. v. Jolly (August 5, 2004), Case No. S113136, can be found at these links in PDF and Word formats. [Note: The links will expire in approximately 120 days; the opinion should still be accessible thereafter by substituting "archive" for "documents" in the URL.]

♣ The importance of "place" in winemaking, and the laudable notion that a wine should be first and foremost an expression of the particular patch of ground from which it grew, was the subject of a recent post by Daniel Davies at Crooked Timber, who lapses into foaming obscene rage over a proposal by the French Minister for Agriculture to loosen standards for the making and labeling for vins de pays. (Oak chips. Ugh! Varietal labeling. Ptui!)

♣ And various weblogs have noted yet another recent study suggesting that wine consumption -- as much as half a bottle a day! -- may make you healthy and wise. Examples and links may be had via Hit & Run and the inebriated inimitable Ken Layne.

Comments

I bought several cases of the Napa Creek wines at Trader Joe's. Apparently there is not one bottle left there and none on the way. This is an outstanding wine for the price. Where can I get it? I am also going to Napa soon and would like to know where this winery is.